The automaker plans to use much of the $4.1 billion in financing that is keeping it going during bankruptcy to pay outstanding bills to parts makers and complete the transfers quickly.

Chrysler is working feverishly to emerge from Chapter 11 bankruptcy before that funding, known as debtor-in-possession financing, expires around the end of June, 60 days after the company filed for bankruptcy on April 30.

On Friday, Chrysler filed with the bankruptcy court an initial list of 1,200 suppliers it wants to continue working with when the new company emerges from Chapter 11 this summer. Chrysler has about 1,300 suppliers, including hundreds in Michigan, and spends $36 billion annually.

The documents list how much Chrysler believes it owed each company before filing for bankruptcy. While such liabilities usually are wiped out in bankruptcy, Chrysler wants the debts paid off before the new Chrysler-Fiat assumes the individual contracts. The automaker is offering to pay 40 percent now and 60 percent post-bankruptcy.

The list is not yet complete. Priority was given to production suppliers for when Chrysler starts building vehicles again. Nonproduction suppliers will be added, as well as some bigger suppliers with more complicated accounts that are still being sorted out.

The list must be finalized before Chrysler exits bankruptcy.

Suppliers were sent letters Friday with forms they must complete to accept the terms. Once returned, payment should be within days, Chrysler officials said. Failure to object assumes agreement.

Objections must be filed within 10 days and a hearing has been set for June 4 before U.S. Bankruptcy Judge Arthur Gonzalez to settle any disputes.

Tom Spillane, a bankruptcy lawyer with Foley & Lardner LLP in Detroit, said suppliers he represents are happy to be on the list, and are now going over the figures. But there are indications that some of Chrysler’s figures could fall short.

In some cases it could be that the total owed to a company does not account for work done by a subsidiary or may not reflect the cost of tooling that has not yet been audited by Chrysler and reflected in the invoice. Those who file objections face delayed payment, Spillane said.

Chrysler also is asking suppliers to stop participating in a U.S. Treasury Department supplier aid program that provides $1.5 billion in funding to guarantee or speed up payments for Chrysler and General Motors Corp. suppliers, even if the automakers are in bankruptcy. To participate, suppliers had to pay a fee of up to 3 percent of the bills.

Scott Garberding, Chrysler’s chief purchasing officer, met with suppliers Thursday and told them they will get a better deal if Chrysler pays them.

Suppliers also learned that Chrysler will no longer approve invoices to be paid under the Treasury program.

Spillane said that policy is angering some suppliers and cuts off aid for companies not yet on Chrysler’s list.

Treasury money is paid in one lump sum whereas Chrysler will not pay the final 60 percent until the sale of all assets to the new Fiat-run automaker is complete. A hearing to finalize that sale is set for May 27.

“Up to this point, the Supplier Support Program has served a critical function of ensuring suppliers’ receivables will be paid,” Garberding said, but suppliers will be “economically better off being paid through the bankruptcy court process.”

The automakers’ needs were outlined in restructuring plans they submitted late Friday in the latest example of Detroit’s hardest-hit automakers taking their pleas for help abroad as the global industry downturn ravages their foreign operations.

GM, which is seeking help from several governments, underscored its urgency Friday when it pushed its sporty Swedish carmaker Saab Automobile AB into bankruptcy.

In Canada, government officials had authorized $3.2 billion ($4 billion Canadian) for GM Canada and Chrysler Canada but economic conditions deteriorated further and the automakers were forced to increase their request for aid from Canada, just as they did in the United States earlier in the week. At least one-fifth of the automakers’ North American production comes from their Canadian operations. To protect those jobs, the Canadian governments have said they feel an obligation to lend an amount equal to about 20 percent of the amount provided by the U.S. government. When GM and Chrysler increased their U.S. request to a combined $39 billion, the expectation was that the Canadian contribution would be adjusted accordingly, to at least $8 billion ($10 billion Canadian).

The Canadian federal government’s contribution to a GM aid package alone may total between $4.8 billion ($6 billion Canadian) and $5.6 billion ($7 billion Canadian), Minister of Industry Tony Clement said in Toronto on Friday.

GM’s exact loan request is dependent on the outcome of cost-cutting negotiations, especially with the Canadian Auto Workers, GM Canada spokesman David Paterson said.

The CAW is being asked to create a health care fund to be owned and run by the union, similar to a trust that will be overseen by the United Auto Workers starting next year in the United States.

CAW President Ken Lewenza said he will explore the idea as long as GM funds it.

A large percentage of health care costs in Canada are government funded, but many costs are not covered, especially for drugs, some elective procedures and upgrades such as private hospital rooms. Paterson said that after pensions, health care is GM’s largest cost. GM also pays a health care tax that has been increasing about 10 percent annually, according to spokesman Stew Low.

Chrysler is not seeking a union-run health care plan in Canada. Spokesman Dave Elshoff said the automaker manages health care expenses in the United States and Canada from its Auburn Hills headquarters.

But Chrysler wants $2.25 billion in federal aid, which represents about 25 percent of its U.S. funding request of $9 billion. That’s because a quarter of Chrysler’s manufacturing output is in Canada, Chrysler Canada President Reid Bigland said in a letter to the government.

Neither Chrysler nor GM call for more plant closures in Canada in their restructuring plans.

Instead, five new vehicles will be built in Canada, including the Chevrolet Camaro next month in Oshawa and the Chevy Equinox at the Cami Automotive Inc. joint venture plant with Suzuki Motor Corp. in Ingersoll, Ontario.

GM also expects to shrink its total Canadian dealerships to roughly 450 to 500 from 700 through consolidation and attrition, spokesman Low said.

Detroit’s automakers have been struggling for months in the face of plunging U.S. auto sales, and their foreign operations are in trouble now too, as the downturn has spread.

The most dramatic sign of the industry’s desperation was GM’s decision to cut Saab loose.

Saab filed for reorganization Friday in the Swedish equivalent of a Chapter 11 bankruptcy.

“Saab’s filing is the first such action and is indicative of the extreme and harsh times the auto industry is undergoing due to the financial crisis, but it is not likely to be the last,” said Paul Newton, an auto analyst with consulting firm IHS Global Insight.

“It is hoped that Saab may be able to reorganize … and emerge as a going concern, but in the current climate this possibility seems remote,” he said.

The United States and other governments have been responsive to the pleas of their carmakers because of the huge number of jobs the auto industry represents.

For GM, the Canadian aid is in addition to $13.4 billion in emergency loans that Washington has authorized. The automaker also is seeking $6 billion from other countries. The list includes South Korea, where GM Daewoo Automotive and Technology is based, and Germany, home of Adam Opel, which represents the core of GM’s European operations.

In the latest figures available, GM said GM Europe lost $1 billion in the third quarter of 2008.

In Europe, “government aid is coming thick and fast for autos, whether it be scrapping incentives, government loan guarantees through the European Investment Bank, direct loans, such as in France, or support for financial services divisions,” said John Lawson, a London-based analyst for Citi Investment Research.

“However, the range of businesses calling for government support is rising, stretching finite resources,” he said in a research note Friday.

According to a report in Financial Times Deutschland, German regional and federal government officials met recently to discuss the possibility of taking a stake in Opel.

The German government has offered to provide up to $2 billion in loan guarantees for the GM subsidiary. GM is seeking more aid but Chancellor Angela Merkel said Wednesday that she wanted to see a restructuring plan for Opel. It employs 26,000 workers at four plants in Germany.

Saab has lost money during most of its 19 years as a GM affiliate.

Analysts say its viability is doubtful, citing its low sales of 92,000 vehicles in 2008, a 34 percent decline from the previous year.

Under the Swedish bankruptcy process, Saab will have a court-appointed administrator who will work with management as it drafts a reorganization plan. It must be presented to creditors within three weeks, Saab said in a statement.

Pending court approval, the reorganization will be executed over a three-month period and will require independent funding.

“We explored and will continue to explore all available options for funding and/or selling Saab and it was determined a formal reorganization would be the best way to create a truly independent entity that is ready for investment,” said Jan Ake Jonsson, managing director for Saab Automobile.

GM Europe said it would arrange timely payment of Saab’s suppliers. “GM is fully committed to maintaining a viable and successful local and global supplier base during the Saab reorganization,” said Bo Andersson, GM group vice president for global purchasing.

GM said it hoped this gesture would encourage suppliers to support Saab’s efforts to become an independent business.

Toyota spokeswoman Ririko Takeuchi said the size of the cut is still undecided. She said talks are under way after the company decided this week to idle production at all 12 of its Japan plants for 11 days over February and March — a stoppage of unprecedented scale for Toyota, Japan’s top automaker.

Under Japanese law, companies must pay at least 60 percent of the average regular wages during such stoppages, she said.

In a stunning reversal of its previously booming fortunes, Toyota projects that it will sink into its first yearly operating loss in 70 years for the fiscal year ending March 31. And fears are growing about the ripple-effects of the U.S. financial crisis to this nation’s export-reliant auto industry, including parts-makers.

Toyota is shedding 3,000 temporary workers in Japan — about half its domestic temporary work force — by the end of March.

The job cuts have not affected the nearly 70,000 full-time Japanese staff, who like workers at major corporations here are generally protected with lifetime employment. Toyota employs 316,000 people globally.

Toyota officials have said they are trying to ease the transition for its laid-off workers, allowing them to stay in the company dormitory for a month, instead of just a week, as in previous cases.

“Protecting employment is of utmost importance for us,” Toyota President Katsuaki Watanabe told reporters last month. “But tough market conditions are likely to continue, and they could get worse.”

Japanese automakers may be faring better than their U.S. counterparts General Motors Corp. and Chrysler LLC, which have been on the brink of collapse until securing a multibillion dollar government bailout.

But the plunge in global demand and the surging yen have hammered their earnings.

Toyota, the maker of the Corolla subcompact and Prius hybrid, saw its U.S. sales in December tumble 37 percent on year. It expects 50 billion yen ($555 million) in net profit for the fiscal year ending March 31, down from 1.7 trillion yen the previous year.

The deal requires the UAW to accept lowered wages by February 17, though many analysts have stated that the incoming Obama administration would have the power to change this stipulation.

Union leaders met with GM officials earlier this week to talk about how the loan agreement’s demands would have to be met. UAW President Ron Gettelfinger stated that the union has no intention to reopen its labor contracts.

The UAW says it will ask its members to vote on concessions before it agrees to them. Official negotiations are set to begin early next week.

The UAW also says it plans to push the Obama administration to modify the terms of the loan after January 20, when the president-elect is sworn into office.

“I can’t see that a strike would serve any benefit right now,” analyst Aaron Bragman of IHS Global Insight told the Detroit News. “It sounds like maybe some Republican union-busting language got in there, which would not surprise me.”

So let’s try to avoid causing the rest of the country to rain down pain and humiliation on us again, OK? Because, so far, you don’t seem to get it.

Insider is speaking of the full-page ads Chrysler LLC-R.I.P. just took out in The Wall Street Journal and USA Today, thanking the citizens of this fair land for “investing” in the troubled carmaker.

Although Insider applauds spending money for any newspaper ads, we need to point out that most of the Americans you’re thanking still don’t think carmakers should get any taxpayer-backed bailout loans. Those folks may get even more cheesed-off seeing you write six-figure checks for their money to buy ads thanking them for something they don’t think you deserve and didn’t want to give you in the first place.

So, auto execs, knock it off with the over-priced thank-yous. And yes, that means canceling those 305,491,874 Fruit-of-the-Month club subscriptions, too.

The announcement follows a pledge Friday by President George W. Bush to offer $17.4 billion in emergency loans to General Motors Corp. and Chrysler LLC.

Ontario Premier Dalton McGuinty says his province will provide 1.3 billion Canadian dollars ($1.07 billion), with the rest provided by Ottawa for a total of 4 billion Canadian dollars in renewable loans payable to the Canadian subsidiaries.

Harper, however, says that today’s announcement “is not a blank check” for the industry, suggesting both the companies and their employers will have to make concessions.

The carmakers are suffering from their slowest sales in 26 years and dwindling operating cash.

Analysts on both sides of the border speculate the bailouts will become much more expensive over the years.

“We’re going to work on what’s been put forth today, and that’s our complete focus,” said CEO Rick Wagoner during a press conference today.

The conditions GM must meet include proving it has a positive net present value, taking into account all current and future costs, and that it can fully repay a total of $13.4 billion in government loans.

“I don’t think it’s impossible,” Wagoner said, adding he was “highly confident” GM can meet the conditions.

Wagoner says the amount President George W. Bush granted in this loan package is adequate to get GM through the first quarter. GM initially had sough $12 billion with a $6 billion in a line of credit if a severe market persists.

GM will get the first installment of the loan money by Dec. 29, says GM CFO Ray Young. Loan terms call for GM to get $4 billion initially, $5.4 billion on Jan. 16 and $4 billion on Feb. 17. That is the date that GM must submit a plan to the “President’s Designee” showing it can “achieve and sustain the long-term viability, international competitiveness and energy efficiency.”

“This is very much an all or nothing deal,” says Rebecca Lindland, a senior analyst at Global Insight in Boston. “What they need to show by March 31 is that taxpayers are not throwing good money after bad. “That’s the whole goal behind these numbers being viable numbers.”

At no point, did the president or anyone in his administration tell GM that the company would be better served going into bankruptcy, Wagoner says.

“Our view has been all along that bankruptcy is a very high risk process,” Wagoner says. “Our intention is to proceed ahead and put together a plan that doesn’t require that, and that’s what we’ll be working very hard on over the next three months.”

Supporting GMAC

GM is also prepared to do whatever it needs to support GMAC Financial in its bid to become a bank holding company and get access to part of the $700 billion in federal Troubled Asset Recovery Plan funds, COO Fritz Henderson says.

“We want to remedy the issues that hamper our ability to sell cars and trucks,” Henderson says. “We’re in talks with the Treasury and Fed to do what we need to do to get that done.”

GM’s liquidity crisis will not affect GM’s new products scheduled to come to market next year, Henderson says. Products beyond 2009 have been postponed, as reported by Automotive News.

GM recently announced it is delaying construction on an engine plant in Flint, Mich., to save money. That plant would produce the engines for the Chevrolet Cruze and Chevrolet Volt sedans. Those cars are not canceled and neither should be dramatically impacted by the construction delay, Henderson says.

But GM will have to make tough decisions about the future of some of its brands. Hummer is for sale and Henderson says GM has been in talks with “interested parties.”

“We’ll have something to say in the first quarter in respect to if there is a deal here or if we need to go down a different path,” Henderson says.

Henderson says the future of Saab is being evaluated by GM’s European arm. GM had said in a plan submitted to Congress earlier this month that it would do such an evaluation.

As for Saturn, Henderson says GM is still “evaluating our options.”

And Wagoner’s future appears to be secure with GM for now. Asked if he still wants to stay given the criticism he has received, Wagoner says: “Do you think I would have gone through what I went through in the last two months and then want to leave? I wouldn’t have done this if I didn’t think this was important work.”

General Motors has announced that they need help and will need help in the future to stay afloat. This comes amidst wide speculation that GM’s stock might be worth $1 sometime soon. The stock value of GM is the lowest it’s been in a long time. The company is being constantly downgraded by analysts, which makes it’s comeback even more unlikely.

We can only hope that the federal government can provide enough money for the auto giants to stay afloat, as according to CNN for every 1 person working for one the Big Three, 9 others work for them at the second tier supplier level. With the destruction of the auto industry, one can only imagine where the countries economy might be headed.

In the opinion of the newspaper, the Big Three employ too many people to be put into jeopardy in case either one of the companies fail. It has also brought up a very valid point, that the funding that has been made available to the companies in the form of re-tooling costs in the sum of $25 billion, will not be available to them for some time to come. This is due to the slow moving banking system and it’s legal teams to work out the details of the plan. In the meantime all three manufacturers are losing money every month.

Cerberus Capital Management LP the private equity firm that is burning through cash on all fronts, including losses at it’s finance unit GMAC, as well as through Chrysler LLC has been very keen to sell of it’s Chrysler holdings to General Motors. General Motors on the otherhand, would like a government infusion of funds in order to complete the purchase.

The newspaper clearly states, that there should be strict conditions on government lending should it offer to bail out the companies. Everything from not paying dividends, to the firing of all top executives has been brought up. The Federal Government is too busy at the moment getting the finance industry straightened out, after which it might focus on automotive.

It is important to note, that the companies that are affected by these bailouts are very much on the top of their foodchain, meaning secondary industries which supply them might fall as well should they experience financial hardship. This translates to millions and millions of jobs disappearing overnight and uneployment increasing.

According to the White House, automakers should tap into the $25 billion allocated to the re-tooling of production lines, which has been available to them for quite some time. The $25 billion is to be used exclusively in order to make automotive production more fuel efficient. The U.S. Treasury does not want to begin a trend of bailing out businesses as it has been receiving bad press over it’s bailout of the financial industry.

General Motors in recent months has been losing $1 billion a month amidst a decline of sales. Future developments have been put on hold including the Suburban/Tahoe, Corvette, Malibu and Chevrolet Cruze models.

GMAC, the financial arm of General Motors is in the process of trying to change it’s commercial classification to become a bank in order to take advantage of the $250 billion bailout package, which has been allocated to the banking industry. Seems that is the only change GM has of taking over Chrysler in its entirety at this time and saving itself.

According to previous discussions even if GM does take over Chrysler, all but 7 models of Chrysler will be cancelled and about 50% of it’s current production plants will be shut down. Maybe it is best for Chrysler employees and the economy if this deal does not take place after all.